Photo of Javier F. Flores

Javier F. Flores is a partner with MG+M, whose trial and litigation practice focuses on food-borne illness, product liability, professional liability and premises liability matters. Javier has litigated cases throughout the country and has extensive experience defending and counseling clients in civil actions.

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Manion Gaynor & Manning LLP (“MG+M”) has obtained a summary judgment on behalf of client HealthPort Technologies (“HealthPort”) in Basil Crookshanks, on behalf of himself and all others similarly situated, v. HealthPort and Charlestown Area Medical Center (“CAMC”).  On Wednesday, May 25, 2017, the Supreme Court of Appeals of West Virginia issued a writ of prohibition ordering the trial court to dismiss a class action case against HealthPort and CAMC brought in the Circuit Court of Kanawha County for lack of subject-matter jurisdiction.  The Supreme Court held that the representative plaintiff, Basil Crookshanks, lacked Article 3 standing to assert a claim because his purported injury was contingent upon a future event.

Plaintiff’s complaint alleged that HealthPort and CAMC (collectively, “Defendants”) had violated W.Va. Code § 16-29-2(a) by overcharging for the production of medical records.  Plaintiff sought to certify a state wide class comprised of all similarly-situated individuals that had requested their records from CAMC or other providers serviced by HealthPort, who had been similarly charged purportedly excessive fees under West Virginia law.

The case arose from Plaintiff’s retention of a law firm (“Plaintiff’s Firm”) to prosecute a medical malpractice claim against a nursing home.  Plaintiff entered into a contingent fee agreement with Plaintiff’s Firm, whereby it would front all litigation expenses and only receive reimbursement, if there was a recovery on Plaintiff’s behalf.

Plaintiff’s Firm requested his medical records from CAMC.  HealthPort, which served as CAMC’s health information management provider, processed Plaintiff’s Firm’s request and invoiced it for the records.  Plaintiff’s Firm paid HealthPort’s invoice and filed the class action on Plaintiff’s behalf soon thereafter. At the time the class action complaint was filed, Plaintiff’s medical malpractice claim was pending and no money had been recovered on his behalf.

Defendants moved for summary judgment on the grounds that Plaintiff’s claims were not ripe and that he did not have standing because not only had he not yet paid for his medical records, but he may never pay for them.  The trial court denied Defendants’ motion for summary judgment.  Defendants petitioned the Supreme Court of Appeals of West Virginia for a writ of prohibition to stop the circuit court from exercising jurisdiction over the case.

The Supreme Court of Appeals of West Virginia agreed with Defendants’ argument that Plaintiff lacked standing, thereby depriving the circuit court of jurisdiction.  The Court summarized standing as “[a] party’s right to make a legal claim or seek judicial enforcement of a duty or right,” Findley v. State Farm Mut. Auto. Ins. Co., 213 W.Va. 80, 94, 576 S.E.2d 807, 821 (2002) (quoting Black’s Law Dictionary 1413 (7th ed. 1999)), and reviewed the three elements of standing as follows:

 

First, the party attempting to establish standing must have suffered an “injury-in-fact” – an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent and not conjectural or hypothetical.  Second, there must be a causal connection between the injury and the conduct forming the basis of the lawsuit.  Third, it must be likely that the injury will be redressed through at favorable decision of the court.”

Id.

 

The Court determined that Plaintiff could not satisfy the first prong of the standing analysis because the record demonstrated that he had not suffered an injury-in-fact.  The Court found that it was Plaintiff’s Firm that had suffered a “direct pocketbook injury.” Further, the Court noted that, “Mr. Crookshanks may become contractually liable to his lawyers for this allegedly unlawful expense at a future date, but until he does, his loss is contingent and conjectural.”

MG+M Partner, Javier Flores, a member of the firm’s class action litigation practice group, served as lead counsel for the Defendants.

 

MillerCoors LLC, owner of the Blue Moon Brewing Company (“Blue Moon”) brand and purported brewer of the Belgian-style witbier, recently removed to the U.S. District Court for the Southern District of California a class action lawsuit filed by Evan Parent on behalf of himself and all similarly situated consumers.  Despite the fact that he claims to be a “beer aficionado,[1]” Parent alleges to have purchased Blue Moon beer from various retailers from 2011 to mid-2012 under the mistaken belief that it was a “microbrew or ‘craft’ beer.” Parent asserts that MillerCoors deceptively marketed and charged a premium for Blue Moon beer by: (1) misleadingly characterizing it as a “craft” or “artfully crafted” beer; and (2) withholding the name “MillerCoors” from its label.

In 1980, there were 8 craft breweries in the United States. By 2014, that number had grown to 3,418.  During that time, craft breweries have slowly cut into the massive share of the $100 billion domestic beer market held by large breweries, such as Anheuser-Busch and MillerCoors. Craft beer has quickly grown from roughly a 3% market share in 2000 to 19% in 2014.  The large breweries have responded by creating their own “craft beer” brands, such as Blue Moon and Shock Top, and by purchasing craft breweries, such as Goose Island, Kona Brewing Co., Leinenkugel, and 10 Barrel Brewing.

Parent’s claim is founded upon the definition of “craft beer” set forth by the Brewer’s Association, a not-for-profit trade association, “dedicated to small and independent American Brewers, their beers and the community of brewing enthusiasts.”  The Brewer’s Association defines “American Craft Brewer” as:

  • Small: Annual production of 6 million barrels of beer or less;
  • Independent: less than 25 percent is owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer; and
  • Traditional: a brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation.

Parent alleges that Blue Moon is located in Coors Field, but that the Blue Moon beer sold in stores is brewed at MillerCoors’ Colorado and North Carolina breweries. Parent asserts that MillerCoors’ massive annual production takes it outside the definition of Craft Brewer set forth by the Brewers Association.

It is undisputed that MillerCoors does not qualify as a “Craft Brewer” pursuant to the guidelines set forth by the Brewer’s Association. Contrary to plaintiff’s assertion, however, the Brewer’s Association is not the arbiter of how “Craft Brewer” is defined.  Additionally, it remains to be seen whether “craft beer” can only be brewed by a “Craft Brewer.” In other words, it is unclear whether the term “craft beer” is reflective of the brewer who produces it or relates to the product itself. Does MillerCoors’ size preclude it from producing a “craft beer,” even if it uses quality ingredients and small batch sizes? Presumably, Parent will have a difficult time disputing the “quality” of Blue Moon beer given he purchased and consumed it regularly over an 18 month period. Despite being an “aficionado,” over that lengthy time period, Parent was unable to distinguish the “quality” of Blue Moon from the other craft beers he presumably consumed.

craft beer 2Parent’s suit is the latest foray of plaintiffs into the requirements of truth in labeling, as it relates to the beer industry, following Anheuser-Busch’s settlement with a class of consumers alleged to have been misled that Kirin Ichiban beer was brewed in Japan. Similar battles have been fought within the food and soft drink industry over terms such as “all natural” and “organic.”

Parent’s initiation of a legal battle over the definition of the term, “craft beer,” and the ability of the large breweries to use that phrase in reference to their product represents the culmination of a significant “craft beer” movement that has dramatically changed the landscape of the beer industry.  The outcome of this case will not only set an important precedent for future mislabeling and deceptive marketing class actions, it could also have a significant and widespread impact on the beer industry, particularly in how large breweries, such as Anheuser-Busch and MillerCoors, respond to their market share losses, and promote their own “craft beer” brands and subsidiaries. Many interested parties will be watching this case carefully, including this writer.

 

[1] No self-respecting beer nerd buys Blue Moon., or refers to themselves as an “aficionado.”

 

The parents of Joshua Kaye, an 8 year-old boy from Braintree, Massachusetts who died on July 7, 2014, after contracting an E. coli 0157:H7 infection that turned into hemolytic uremic syndrome, have filed suit against Whole Foods, the retail store from which they allege to have purchased the contaminated meat, and Rain Crow Ranch, a Missouri company that allegedly produced and sold the meat to Whole Foods. Joshua Kaye was one of three Massachusetts residents known to contract E. coli between June 13 and June 25, 2014, prompting an investigation by the U.S. Department of Agriculture Food Safety and Inspection Service (“FSIS”), in conjunction with the Center for Disease and Control Prevention (“CDC”) and the Massachusetts Department of Public Health. FSIS, which began its investigation on June 25, 2014, purportedly initially linked the E. coli contamination to Whole Foods stores in Newton and South Weymouth, Massachusetts, through epidemiological evidence. FSIS reports that laboratory testing performed on August 13, 2014, presumably Pulsed-field Gel Electrophoresis (“PFGE”), provided a link between the three Massachusetts cases and the Whole Foods markets. On August 15, 2014, Whole Foods initiated the voluntary recall of 368 pounds of ground beef products from its two stores.

Joshua Kaye’s father, Andrew Kaye, told New England Cable News (“NECN”) that DNA samples had linked their son to the E. coli outbreak. Furthermore, Plaintiffs’ Complaint asserts that a stool sample taken from Joshua Kaye resulted in an E. coli 0157:H7 positive culture that “identically matched the Whole Foods Market E. coli 0157:H7 outbreak strain.” Both Whole Foods and Rain Crow Ranch have denied any clear link between the Massachusetts E. coli illnesses and their respective businesses.

Plaintiffs have asserted claims against Whole Foods for: (1) Breach of Implied Warranty of Merchantability; (2) Breach of Warranty in Violation of M.G.L. ch. 93A; (3) Breach of M.G.L. ch. 93A; (4) Negligence; (5) Gross Negligence and Reckless Conduct; (6) Negligent Infliction of Emotional Distress; (7) Conscious Pain and Suffering; (8) Wrongful Death; and (9) Punitive Damages.

What Does It Mean for Whole Foods? As a non-manufacturing product seller, Whole Foods appears to have pass-through liability for the sale of contaminated beef. On that basis, we expect Whole Foods to tender the defense and indemnification of their claim to Rain Crow Ranch. Whole Foods’ success in getting their tender accepted, however, will depend upon the terms of their contract with Rain Crow Ranch for the purchase of ground beef, as well as their role, if any, in the production process in advance of sale. For instance, if Whole Foods’ handling or processing of the subject beef caused or contributed to the alleged E. coli contamination, its independent negligence would preclude a common law indemnification claim and potentially impede a claim for contractual indemnity.

Further, Whole Foods’ tender will be complicated, by Plaintiffs’ assertion of Massachusetts General Laws Chapter 93A claims (“93A”). 93A provides a cause of action for unfair or deceptive practices in the conduct of any trade or commerce. Entities found to have breached 93A can be subject to double or treble damages. Plaintiffs have asserted two separate 93A claims against Whole Foods: (1) for the sale of contaminated meat in contradiction to its marketing of the product as safe; and (2) for failing to make a reasonable offer of settlement in response to Plaintiffs’ 93A demand letter. The latter 93A claim presumably falls outside the bounds of any indemnification provision contained within a purchase agreement entered into by the defendants relative to the subject beef, because it arises from acts independent of the sale of Rain Crow Ranch’s product.

Genetically modified organism lemons

California’s Secretary of State recently announced that the California Right to Know Labeling Initiative will be Proposition 37 on this November’s state ballot. If passed, this initiative would require labeling by food manufacturers of any genetically modified organisms (GMOs), also known as genetically engineered organisms (GEOs).

GMOs made their first public appearance in 1994, when a tomato became the first genetically engineered product sold. Since then, GMOs have become increasingly more common in everyday products. In fact, the Grocery Manufacturers of America estimates that approximately 70 to 75% of processed foods available in U.S. grocery stores contain a GMO.   Furthermore, the FDA, which oversees product labeling requirements, considers GMOs to be “generally regarded as safe” (GRAS) and does not require that they be identified on product labels.  Nevertheless, despite nearly two decades of main stream retailing, it seems that the American public remains largely unfamiliar with the both the benefits and commonality of GMOs, as well the scientific community’s support for their safety.

How will Prop 37 impact the food manufacturing industry?

Should California vote in favor of Proposition 37, the imposition of similar labeling requirements is likely to follow in other states around the country.  As a result, manufacturers will likely experience increases in operational costs, as they are forced to adjust their manner of handling and preparing their products to account for GMOs.  Furthermore, food companies will also see increased legal costs,  because increased labeling requirements would also increase the potential for litigation, namely false-labeling class actions, which are becoming increasingly more common.  These class actions are not only costly to defend, but also harmful to a food company’s brand.

Where will these impacts manifest?   

  • Food producers will need to implement a system for maintaining separate inventories of product, so as not to mix the GMOs and non-GMOs.
  • Companies will be forced to amend their HACCP plans to address the handling of GMOs.
  • Overhead may increase as a result of inconsistent GMO labeling requirements nationally.
  • Companies will be forced to choose between having one label which adheres to each state’s requirements and utilizing different labels depending on the state in which the GMO containing product will be sold.
  • In response to potential consumer backlash against products containing GMOs, food manufacturing companies may need to raise the price of their products, discontinue certain brands, or engage in costly marketing campaigns to ensure future profitability.
  • Increased labeling requirements would also increase the potential for litigation in the form of false-labeling claims.

In business, smart companies aim to do business ethically and place the health and safety of their consumers first; they have the ability to meet goals while still complying legally with an ever-changing legislative landscape.

What are smart companies in the California food industry doing to prevent consumer backlash and insulate themselves from potential lawsuits in a post-Proposition 37 market?

  • Communicating: In-house counsel and litigation counsel should be having frequent conversations regarding the short and long impact of this initiative. Great litigation firms not only understand how legislative changes impact their clients’ ability to remain profitable, but they are proactively providing solutions that address present and future challenges, as well as ensuring that their clients understand the risks and outcomes associated with each.
  • Searching for Opportunities: Proposition 37 is an agent of change. Whether that change has a positive or negative impact on a company can depend largely on the ability of the organization’s leadership to seek out opportunities to enhance performance and value. This is another area where outside counsel can be particularly effective by providing in-house training, trend analysis and creative, cost-effective solutions.
  • Understanding that Knowledge is Power: In a real-time, social media driven world smart companies are making sure that their websites are not only current but linked across their social media platforms so that brand loyal consumers have easy access to product information that is transparent and accurate.
  • Seeing the Bigger Picture: Should Proposition 37 pass, other states may soon follow suit and impose similar labeling requirements which could increase the potential for litigation, including class action law suits. Often these types of suits can be prevented by aggressively and rapidly responding to an initial claim. Make sure your litigation attorneys have an intimate understanding of legal nuances and variances for each state where you do business so that they can respond to any threats immediately and appropriately.

Like the food industry, we will watch carefully this fall to see whether California votes in favor of Proposition 37.  Until then, the authors would be pleased to respond to any questions our readers may have regarding Proposition 37 and the potential impact we believe it could have on the food industry.

Raw Hamburger

OnJuly 22, 2012, Cargill Meat Solutions Corporation (“Cargill”) announced a Class I voluntary recall of approximately 30,000 pounds of fresh ground beef due to contamination from Salmonella Enteritidis.   The recall follows a Salmonella outbreak involving 33 patients in seven states (MA, ME, NH, NY, RI, VA, VT).  An investigation performed by the Food Safety and Inspection Service (“FSIS”), the regulatory agency responsible for ensuring that our country’s commercial supply of meat is safe, has linked five cases of Salmonella infection to ground beef produced by Cargill on May 25, 2012.

Additional incidences of salmonellosis related to the meat subject to the recall should be few, as the onset of the five illnesses which were traced back to the subject ground beef were all well over a month ago, between June 6, 2012 and June 13, 2012.  Symptoms of salmonellosis, which include diarrhea, abdominal cramps and fever, generally manifest between 12 and 72 hours after consumption.  The use by date on all ground beef recalled by Cargill has passed.  Accordingly, none of the meat recalled is presently available for retail purchase.   Concerns remain, however, with respect to whether consumers may have stored potentially contaminated meat in their freezers for later consumption.

Cargill recalled 36 million pounds of ground turkey in August of 2011, after 107 people in 31 states were infected with salmonellosis.   In response to the last recall, Cargill temporarily halted ground turkey production at its Springdale, Arkansas facility in order to implement additional quality and testing standards.   Cargill has not yet determined the source of the bacteria contamination in relation to the present recall.  Accordingly, it is unclear what measures Cargill will implement to prevent future incidents of contamination.

Though it remains early in the recall process, Cargill has performed admirably in working to protect public health, while at the same time protect its brand and minimize the commercial impact of the current Salmonella Enteritidis contamination.

An effective recall requires preparedness, a rapid response, transparency, and a focus on the consumer.  Cargill has exhibited all of these qualities in this instance by:

  1. quickly identifying the potentially contaminated batch of ground beef;
  2. rapidly initiating a voluntary recall;
  3. working effectively with the FSIS to protect consumers against further infection; and
  4. issuing an apology to those who have become ill.

Now, Cargill must work to identify the source of the Salmonella Enteritidis contamination so it may implement measures aimed at the prevention of any future occurrences and attempt to restore consumer confidence.